A Few Mistakes to Avoid While Buying Insurance
Following are some of the mistakes that consumers make while purchasing insurance:-
1. Assuming insurance is out of reach – It was reported that 48mn American citizens had no health insurance in the year 2012. And around 30% of homes in the U.S. do not have life insurance according to a study conducted by LIMRA, a famous consulting and research organization for insurance and financial services. In many cases, consumers do not take up insurance because they think it’s out of their budget. This study also revealed that an average consumer estimates life insurance to be 3 times more expensive than it actually is.
Most of the consumers fail to realize that they can avail of financial help if they purchase their own health insurance. Consumers should ask for discount or they can end up overpaying.
2. Relying on assumptions or outdated figures – Change in the economic scenario and circumstances could mean that you may need more coverage in insurance than you already have. For example, in the past for life insurance consumers have based their coverage on their current income, in case that person passes away though, more money will be needed at work to provide that same income to his/her beneficiaries.
In the case of home insurance, your house could be under insured if the price to build a house has substantially increased due to increased material costs or in case of renovation. This is the reason why experts say you must review your insurance plan at least once every year to make sure that the coverage still fits your needs,
3. Shopping on price alone – The comparison of insurance policies can be very confusing and a lot of consumers are tempted to choose the insurance policy which offers the lowest premium. An important factor to consider is the reputation of the company and the amount of coverage that you receive for the premium. Generally with regards to health insurance the higher the premium amount, the lower you pay when you visit the doctor.
With disability or long-term care insurance, prices can vary depending on the length of the elimination period – the amount of time you must wait before coverage kicks in – and whether the policy includes inflation protection, so consider these factors, too.
4. Glossing over the details – You must make sure that you fully understand what all is covered under your insurance policy. Go through your insurance policy and get in touch with your insurance agent if you are unclear about anything. Sadly, many people do not find out about the full extent of their coverage until they face a loss. For instance most insurance policies do not cover flooding under the home insurance policy and most consumers are not aware of this.
5. Setting your deductible too low – Usually the result of setting a low deductible means higher premiums, especially in the case of casualty insurance and property, Insurance is made to protect you against the unexpected losses that you could not cover yourself.
You need to think about how much risk you are ready to assume before you try to make a claim and the insurance agency pays on your claim. You need to think about how much of the loss you could actually pay yourself.